So progressive
Sotomayor speaks

Mortgage fraud in Canada?

Lawyers arguing the Ontario Securities Commission’s case against Home Capital Group Inc. pushed to expedite the potentially-lengthy proceedings at an opening hearing Thursday.

Looks like the Canadian government wants to make an example out of HCG.

Since the OSC allegations were announced, the company, which is Canada’s largest alternative mortgage lender, has seen investor confidence erode and a partial run on its funding, with clients pulling money out of high interest savings accounts with Home Capital’s subsidiary, Home Trust.

The balances of these accounts — which have fallen from $1.4 billion on April 24 to $391 million on May 1 — help Home Capital fund mortgage lending, primarily to those who do not qualify for loans at traditional banks.

Damn.

Shares of Home Capital were closed at $6.01 in Toronto on Thursday, down more than 72 per cent since April 19.

Ouch! The shares went down to just under $6 last week and then spiked by 35% in one day. There must be a few happy day traders out there. Though, long run appears bleak for HCG. Let's see how this impacts the broader market.

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